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Reputation Risk Is Top Of Mind

Two-thirds of directors on company boards say reputation risk is their biggest nonfinancial concern.

Two-thirds (66%) of directors on the boards of more than 190 public and privately held companies surveyed by the accounting firm EisnerAmper say reputational risk remains their biggest nonfinancial concern, down slightly from the 69% who said the same thing last year.

EisnerAmper partner Steven Kreit, one of the study’s authors, says he wasn't surprised. “Particularly with all the news relating to reputational risk we’ve seen—the BP well blowout, the security breaches of customer credit data, and so on—it’s understandable.”

Jim Mack, another EisnerAmper partner, adds, “Remember, it’s not just reputational risk. Every other kind of risk also contains reputational issues.” Mack cites the Exxon Valdez oil spill in Alaska as an environmental problem that became a huge reputational issue for Exxon. “When people see Exxon today, they still remember the Exxon Valdez, and that happened almost 25 years ago!”

Three other types of nonfinancial risk were rated as top concerns by more than 50% of respondents: regulatory compliance risk (59%), CEO succession planning risk (53%) and IT risk (54%). Among the top concerns, only IT rose in importance from last year, when it was cited by 51% of directors surveyed.

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